Resident alien PhD stipend and Roth IRA

[Voilà]

I was just using TurboTax to file my tax return. I initially inputted my PhD stipend + tax treaty exemption under the miscellaneous income section (basically added the amount and subtracted the same amount under treaty exemption). But I later found out that I shouldn’t have contributed to Roth IRA since I have no taxable income. I remember the SECURE act that allowed PhD stipends to be contributed to IRAs. 

I wonder if my stipends are exempt under tax treaty, can I still take them as taxable income and contribute to Roth IRA? Also, should I input stipends under the fellowship section of the miscellaneous income section, as said here: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/form-1042s-on-income-tax-treaty-...

Thanks!

[DaveF1006]

To clarify, what country?

[Voilà]

China, which has treaty exemption even after one becomes an RA

[DaveF1006]

Yes, your stipends are exempt under the tax treaty provisions up to an amount of $5000. You may elect not to take the treaty exemption for the purpose of contributing to a Roth since stipend income is taxable compensation eligible for Roth contributions.

[Voilà]

Thanks! All my stipends were tax exempt since I was not doing teaching/research assistant work as a first year. Article 20(b) allows that.

I wonder if I can still contribute to Roth IRA while claiming the tax treaty benefits, or I can only choose one. Should I pull out all the money I put in Roth IRA since I already claimed the benefit?

[Vanessa A]

You cannot take double benefits.  In order to contribute to the Roth IRA, you must have earned income. So, you cannot contribute to the Roth IRA if all of your income was exempt.  You can only choose one.  If you choose the treaty, yes, you would need to remove the money. 

Roth IRA: Who can Contirbute?

[Voilà]

Got it. Thanks so much!

[Voilà]

I just submitted a request to pull all my contributions and earnings out. It seems I will receive a 1099-R next year detailing this excess withdrawal. I wonder if I should report the earnings from Roth IRA on my tax return for 2023 or should I do that on my tax return next year for 2024?

[DaveF1006]

It would be best for you to wait until 2024 and do this all at once.

@Voilà